Stocks Begin June with a Yawn

Just like most of us returning from a long three-day weekend, the market ran out of steam in Tuesday’s session and began the month of June with a rather flat performance.

The major indices had an energetic start and seemed ready to continue last week’s solid close. The Dow climbed approximately 300 points at its best, but finished in the green by only 45 points. It was up a scant 0.13% to 34,575.31. Meanwhile, the S&P was off 0.05% to 4202.04, while the NASDAQ dipped 0.09% (or about 12 points) 13,736.48.

Last week was strong for all indices as stocks pushed past further signs of rising inflation in a very low volume environment. The NASDAQ was especially impressive despite all its challenges by jumping 2% for the five days. The S&P was up 1.2% last week and the Dow improved 0.9%.

With the lion’s share of earnings season over and a new month beginning, we’ll be getting a lot of economic data this week. It started today with a solid ISM manufacturing index, which jumped to 61.2 for May from the previous month’s 60.7. The result was also above expectations as demand is on the rise in a re-opening economy. Any reading over 50 means expansion.

Of course, the big news comes on Friday with the Government Employment Situation report. You undoubtedly remember that last month’s print showed the economy adding only 266K jobs… when more than a million were expected! Whatever the specifics might be, it’ll play a part in the Fed’s next meeting later this month and, therefore, in the minds of anxious investors who fear a change in policy.

‘Peak’ earnings season may be behind us, but there are still some noteworthy names going to the plate. One of them came after the bell today with cloud-based video conferencing company Zoom Video Communications (NASDAQ:ZM), which beat the Zacks Consensus Estimate by 36% with revenues soaring nearly 200% year over year.

ZM will certainly see it’s growth slow now that the pandemic’s days are numbers and people go back to in-person meeting. But we all know that these shutdowns have changed the way business will be done in the future, which means ZM’s services will continue to be in demand.

Maybe that’s why this stubborn market, which gave the cold shoulder to most strong reports this earnings season, has allowed ZM to move higher by more than 3% afterhours, as of this writing.

To recap the May totals, the Dow rose 1.9% last month as recovery names came into favor amid the vaccination rate and easing restrictions. The S&P advanced 0.5%, but the NASDAQ slipped 1.6% as tech stocks went unappreciated.

Now let’s see what June has in store for us.

Today's Portfolio Highlights:

Surprise Trader: With Covid on its last legs, Dave & Busters (PLAY) is finally rebounding. However, this dining and entertainment company is still well off the pre-pandemic highs near $52. Dave (the editor) thinks that PLAY may be able to make up some of that lost ground when it reports again after the bell on Thursday, June 10, especially if it can beat the Zacks Consensus Estimate for a fourth straight quarter. The company topped by 10.5% last time and has a positive Earnings ESP of 107.9% for the upcoming release. The editor added PLAY on Tuesday with a 12.5% allocation, and also decided to “give up” on Kohl’s (KSS). Read the full write-up for more on today’s moves.

Commodity Innovators: It was a good session for energy and materials names, which are specialties of this portfolio. As a result, the service had three of the top five best performers on Tuesday. The noteworthy results that made this impressive feat possible were Devon Energy (NYSE:DVN, 13.7%), Sibanye Gold Ltd. (SBSW, +8.6%) and Nucor (NYSE:NUE, +8%).

Zacks Short Sell List: Nearly half of the portfolio was replaced in this week's adjustment. The four stocks that were short-covered include:

• Las Vegas Sands (NYSE:LVS, +2.2%)
• Chegg (NYSE:CHGG)
• T-Mobile US (NASDAQ:TMUS)
• Yandex N.V. (NASDAQ:YNDX)

The new buys that filled these open spots were:

• Callaway Golf (NYSE:ELY)
• GoodRx Holdings (GDRX)
• JOYY (NASDAQ:YY)
• Maxar Technologies (NYSE:MAXR)

Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short Sell List Trader Guide.

Black Box Trader: Only two changes in this week's adjustment, which is coming a day late due to the Memorial Day holiday. The stocks that were sold today included CNH Industrial N.V. (NYSE:CNHI, +4.4%) and Graphic Packaging (NYSE:GPK, +1.9%), and the new buys that replaced these names were American Axle (NYSE:AXL) & Manufacturing (AXL) and Cornerstone Building Brands (NYSE:CNR). Read the Black Box Trader’s Guide to learn more about this computer-driven service. By the way, this portfolio easily had the top-performing stock among all ZU names on Tuesday as Tenneco (TEN) jumped 19.1%.

Have a Good Evening,
Jim Giaquinto

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